Housing Authority of the City of El Paso
Changing the Face of Public Housing
2015 ANNUAL REPORT
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VISION
MISSION
To be the premier provider of affordable housing in the United States by driving exceptional value for our federal tax payers and investors and through exceptional customer service to our residents, clients, partners, stakeholders, and employees.
The mission of the Housing Authority of the City of El Paso is to provide safe, decent, and affordable housing to assisted families living at or below 80 percent of the area median income.
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TOP TEN FACTS HACEP is converting and renovating 6,100 Section 9 Public Housing unites to Section 8 Project Based Rental Assistance through the Rental Assistance Demonstration (RAD) Program, making HACEP the largest public housing authority to convert its entire portfolio in the United States. HACEP operates 6,500 public housing and new construction units, 5,600 Housing Choice Vouchers, and more than 2,000 tax credit and non-subsidized units. HACEP serves 40,000 low-income El Pasoans, or 6 percent of the city’s population, through our housing assistance programs. HACEP is the largest public housing authority in Texas and the 14th largest in the United States based on our number of public housing units. HACEP has achieved “High Performer” status every year since 2003 from the U.S. Department of Housing and Urban Development. HACEP provides more than a hand out, but a hand up through its homeownership and Family Self-Sufficiency Programs. Since 2003, more than 200 HACEP families have closed on their own home. In addition, thousands of individuals have attained their GED, learned English as a Second Language, and have attained sustainable employment. HACEP employs 400 dedicated employees ranging from professional executives to well-trained craftsmen. HACEP is one of the most financially sound public housing authorities in the U.S. and has earned an unqualified financial audit with no findings for the past four consecutive years. HACEP provides 204 HUD-VASH Vouchers and 15 Shelter Plus Care units for homeless veterans, 22 Shelter Plus Care units for chronically homeless disabled civilians and 50 units for domestic farm laborers.
Close-up of rooftop terrace atop the Paisano Green Community.
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IV
TABLE OF CONTENTS
Mayor’s Message
2
Chairmans’ Message
3
Rental Assistance Demonstration (RAD)
4-5
HACEP Acquisition Corporation (HAC)
6
Providing a Hand Up
7
Financial Statements
8-9
Mayor’s Message As part of my “El Paso is Open for Business” campaign, I have taken a multi-pronged approach to growing the El Paso economy. One of the components to this effort is attracting new businesses to our region. Since I took office in May 2013, we have created 5,000 new jobs and attracted numerous new businesses to relocate to El Paso. Our geographic location, educated and skilled workforce, and low cost of doing business are just a few of the numerous tools our region has to compete across the globe to bring jobs and business to El Paso. But there are a number of factors that influence the decision among corporate executives to move their families to El Paso. They are not only buying homes and living in the city, but also they will eat, shop and play all across the region. El Paso’s quality of life continues to prosper each and every day and is one of the many reasons corporations from around the world are attracted to our region. From our new Triple-A ballpark, the investment through the quality of life bond projects and the renovation of all of our City’s public housing communities through the Rental Assistance Demonstration Program, the City of El Paso continues to show the world that we have plenty to offer. As a community, we must continue to look at the big picture. HACEP is doing just that. By aligning their operational decisions to Plan El Paso, we are just now beginning to accomplish our strategic initiative to revitalize neighborhoods within our City’s urban core. As HUD transfers ownership of the public housing units to HACEP, we can now leverage these assets to raise significant capital to reinvest into the units and create some of the most energy efficient affordable housing in the United States. Through additional tax credits through the State of Texas, our City’s oldest housing will be transformed into beautiful communities that will breathe fresh life into our neighborhoods and create more economic opportunities. These renovated apartment communities will also enhance the City’s quality of place and make El Paso an even more attractive decision for major corporations and their families to call El Paso home. Everyone at HACEP has a deep passion to fulfill the mandates of their mission to provide safe, decent, and affordable housing to nearly 40,000 El Pasoans every day. Through its consistent recognition as a High Performer by HUD, its solid financial performance and headline development efforts, HACEP has raised the bar among its industry peers and placed El Paso on the map of affordable housing excellence. As El Paso continues its multi-year trend as being the safest large city in the nation, the City of El Paso reaffirms the value of services provided by HACEP and looks forward to our continuing partnership in making El Paso a place we are all proud to call home.
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Sincerely,
Oscar Leeser Mayor of the City of El Paso
Chairman’s Message It has been my privilege to serve as the Chair of the HACEP Board of Commissioners since 2008. Over these last several years, I have seen firsthand the impact that this public housing authority, now the 14th largest in the nation, affects the lives of so many El Pasoans. I have seen remarkable improvements in the way the staff and administration handle the day-to-day operations. I have witnessed record numbers of residents close on their own home. And I have seen how industry leaders are turning their heads to El Paso for answers to the big questions that affect the other 3,100 public housing authorities in the country. This past year was filled with a number of accomplishments that are worth celebrating. HACEP’s first mixed income, mixed finance community was delivered on time and on budget. Eastside Crossings is HACEP’s first engagement with a 9 percent tax credit secured through the Texas Department of Housing and Community Affairs. It features 64 public housing units, 79 affordable units, and 45 market rate units all built to LEED Silver equivalent standards. With a pool, two covered playgrounds, covered parking, walking trails, and a fitness center, this property is a shining example of the new form of affordable housing for the Sun City. Another accomplishment is HACEP’s exceptionally strong current ratio on its balance sheet. Despite the shrinking Federal budget, HACEP continues to have one of the strongest balance sheets in the industry. Through fiscally prudent cash management strategies and wise investments, HACEP is leading the way to do more with less while maintaining its solid financial foundation. This due diligence also earned enabled HACEP to receive an unqualified audit with no management findings for the fourth year and earned Excellence Award for 2014 Annual Budget from the Government Finance Officers Association.
Sincerely,
Joe Fernandez Chair of the HACEP Board of Commissioners
Finally, HACEP has taken the bold step to engage in the Rental Assistance Demonstration, or RAD, to convert 6,100 public housing units from the conventional Section 9 public housing to Section 8 project-based rental assistance. In April 2015, HACEP began relocating residents out of their units to invest approximately $500 million in rehabilitation and reconstruction projects. When everything is complete in 2019, HACEP and the City of El Paso will have some of the highest quality affordable housing in the United States. These efforts will also ensure the agency’s survival for at least the next 40 years. This is truly a bold project and the Board of Commissioners are very confident in the ability of the staff and the communication and partnership with our residents to ensure our collective success. In closing, I thank Kevin Quinn and Lupita Licerio for their years of service as Commissioners on the HACEP Board. Together, the three of us successfully completed the terms of our Mayoral appointments and we have accomplished a lot. Together with Burt Blacksher and Francisco Ortega, we are confident that the new Board of Commissioners will ensure the sustainability of HACEP for generations to come.
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Rental Assistance Demonstration (RAD) What is Rad? The Rental Assistance Demonstration (RAD) program was created to give public housing authorities (PHAs) a powerful tool to maintain and improve public housing properties. RAD addresses the $26 billion build-up of uncompleted maintenance services in our country, and also gives owners of the Department of Housing and Urban Development (HUD) “legacy” programs (Rent Supplement, Rental Assistance Payment, and Section 8 Moderate Rehabilitation) the opportunity to enter in long-term contracts that help ease the financing of property improvements. RAD is here to make sure that the Housing Authority of the City of El Paso (HACEP) continues serving the people in our community who need us most Approximately 17,000 public housing residents rely on HACEP’s ability to provide safe and affordable housing. Of those 17,000, more than 10,000 are classified as extremely low income, and 2,300 are senior citizens. HACEP has seen an $18 million lack of funds since 2008.
4. Continues public care of all improved properties with clear rules on continuous ownership and use. 5. Maintains the exact same costs without increasing HUD’s budget. This program simply moves housing properties from the public program to the Section 8 program. In this way, providers can leverage private capital markets to make improvements. 6. Makes improvements to all housing properties, based on each property’s age and design. The following improvements apply to all properties: a. Permanently remove all asbestos (if present) b. Kitchen and bathroom upgrades c. Replace old ventilation shafts and ducts behind walls
RAD’s Major Accomplishments
d. Replace old electrical, plumbing, and lighting systems
1. Enables PHAs to leverage public and private debt to reinvest in public housing properties and attend the $26 billion buildup of uncompleted maintenance services in the U.S.
e. Replace appliances with new Energy Star certified ones
2. Moves housing properties to a Section 8 program (Housing Choice Voucher) with a long-term contract that must be renewed by law. This ensures that all properties remain permanently affordable to low-income households. 3. Allows residents to keep paying 30% of their income as rent and maintain the same basic rights of their current public housing program.
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f. Install more energy efficient insulation, windows, and doors (if necessary) g. New landscaping and playgrounds h.Install new property signs i. Resurface parking lots LEFT Paisano Green Community
RIGHT Alamito Terrace
The Background
• Increase the quality of life for our residents
The Background Rental Assistance Demonstration (RAD) is a Housing and Urban Development (HUD) initiative to convert Public Housing into Project Based Section 8. This was in response to address the over $26 billion in capital improvement that is desperately needed across the country. Under RAD, HUD transfers ownership of the existing properties, and provides Project Based Housing Assistance Payment contract for twenty years, with renewal for another twenty. This provides Housing Authorities to leverage financing to rehabilitate the property, which is a HUD requirement.
• Infuse $600-$800 million to the local economy, with no tax payer dollars
Initially HUD allocated 60,000 vouchers across the county. When the deadline passed, only 15,000 of the 60,000 vouches were awarded. HUD then removed the 1,000 voucher restriction per Housing Authority. This is when HACEP applied for the CHAP for its entire portfolio. HUD awarded HACEP the single largest portfolio wide RAD award in the United States. Since then, the demand of RAD has increased and HUD has allotted 185,000 vouchers nationwide. Opportunity HACEP had conducted a Physical Needs Assessment (PNA) assistance several years ago and estimated that we would require approximately $50 million in funds to upkeep the currently portfolio, some of which we built in the 40s and 50s. This would have taken 20 years to fix, based on the current capital funding. HACEP’s decision to convert to RAD provides the following benefits:
Challenges • Mobilizing the resident to support RAD and explain their long term benefits • Generating vacancies to provide temporary housing to current residents during construction • The logistics of physically moving 20,000 residents • Catering to the special needs of our senior and handicap residents • Minimizing the disruption to the normal life of the residents schools, medical needs, etc. • Complementing the construction in five years are required by HUD • Adapting to a business centric model Timeline HACEP is required to complete the renovation within five years. Because of the size of the project, we will be phasing the project into several tranches. The construction of Tranche 1 with 1590 units is expected to commence in early April. The remaining properties will be constructed between 2016-2018.
• Guaranteed funding for the next forty years
Conclusion
• Opportunity to modernize our aging housing stock
This initiative will radically change HACEP. The introduction of newly built or renovated properties will provide a green, environmentally clean and sustainable housing for our residents for the next forty years. In keeping with the City of El Paso’s development plan, this project will remove blight and increase the quality of life of people of the City of El Paso at large.
• Comply with current accessibility requirements • Leverage building and funding to obtain financing for modernization
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HACEP Acquisition Corporation (HAC) The Housing Acquisition Corporation, or HAC, is a whollyowned subsidiary of HACEP. HAC manages 1,690 Low income Housing Tax Credit (LIHTC) and Non Subsidized (or Non-Annual Contributions Contract Non-ACC) Properties. Both programs provide affordable housing to tenants who can afford to pay rents at or below 60 percent of the area median income. The LIHTC program is a dolla-for-dollar tax credit in the united States for affordable housing investments. It was created under the Tax Reform Act of 1986 (TRA86) that gives incentives for developers both public and private to create affordable housing aimed at low income Americans. LIHTC accounts for approximately 90 percent of all affordable rental housing created in the United States today. HAC also provides property management services to the following non-onwned tax credit and market rate properties, each of which has a property of the same name:
The primary goal of HAC is to provide property management services to owned and non-owned affordable and other multifamily properties. HAC is managed by a professional team of 41 employees who specialize in the property management, maintenance, and finance fields.
Entity
HAC corrently invests through a limited partnership with the following entities, each of which has a propertyof the same name:
Name Bienvivir Parkside Ltd. Cedar Oaks Ltd. Meadowbrook Townhomes Ltd.
56 160
Alamito Terrace
76
Alamito Gardens
142
Chai Manor
60
Desert Sun
28
Elvin Estates
15
Kennedy Brothers
2
Las Casitas
5
Lee Seniors Ltd.
19
Lomaland Townhomes
14
25
Orchard
4
200
Sitgraves
3
Saul Kleinfeld Ltd.
30
St. Johns
12
Western Pebble Hills Ltd.
30
Villa Alegre
Western Pellicano Ltd.
30
Western Burgundy Ltd.
64
Western Carolina Ltd.
56
Western Crosby Ltd.
19
Western Eastside Seniors Ltd.
19
Western Gallagher Ltd.
49
Western Redd Road Ltd.
30
Western Yarbrough Ltd.
32
North Mountain Ltd.
Total:
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Units
Units
531
Total:
369
1,055
Providing a Hand Up HACEP provides more than a hand out, but a hand up to the 40,000 El Pasoans who receive some form of housing assistance through our Public Housing and Housing Choice Voucher Programs. Through innovative strategic partnerships, HACEP is forging new opportunities for our youth, elderly, and working families to pave a better path toward economic independence. After all, each family who graduates from subsidized housing assistance creates a vacant unit or available voucher that can then be allocated to another family in need who has patiently waited for years to enter our programs. Some of the award-winning programs that we offer in conjunction with our community partners include the following: • Higher Opportunities Thrive (HOT) Summer Conference with the University of Texas at El Paso (UTEP) that introduces up to 400 youth ages 10-18 to the campus and career opportunities each summer. There the kids explore a variety of career options and develop leadership skills that will help them excel in their future careers. • Alpha Youth Leadership Academy with UTEP to prepare students to become happy, healthy, engaged and self-sufficient adults The following sets of skills are developed: • critical thinking and problem solving • collaboration across networks and leading by influence • agility and adaptability • initiative and entrepreneurialism • effective oral and written communication • accessing and analyzing information • curiosity and imagination
• Back to School Supply Drive to provide hundreds of backpacks and supplies to children of the Housing Choice Voucher Program through the generosity of multiple area credit unions, business and individuals.
Home Ownership For those families who wish to permanently move out of Public Housing or the Housing Choice Voucher (HCV) Programs, HACEP offers Family Self-Sufficiency (FSS) programs that also help our residents and clients make their dreams come true. Since 2003, more than 200 families have purchased their own homes through HACEP’s FSS programs. The HCV Homeownership Program helps participants transition from rental assistance to homeownership using their voucher assistance. The HCV Homeownership Program is available to all voucher holders who meet the minimum requirements and qualifications set forth in the HACEP Administrative Plan and who have the ability to independently secure a mortgage loan. FSS is a voluntary program open to adults residing in Public Housing or the Housing Choice Voucher programs. Upon enrollment, individuals meet with an FSS Coordinator who helps the individual develop a five-year training and services plan that charts the steps they needs to take to acquire and maintain employment, increase their earnings, become independent of welfare assistance, and achieve other individual goals (such as homeownership). As the family’s earnings increase, the family rent goes up. However, an amount roughly equal to the increase in rent due to the family’s increase in earnings transfer in to an escrow account that the family receives upon successful graduation from the FSS Program.
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Statements of Revenue, Expenses and Changes in Net Assets (h thousands)
Year Ended June 30
2014
2013
2012
$18,723
$18,463
$17,800
53,510
51,064
50,222
5,416
4,674
9,041
77,649
74,201
74,063
39,212
37,108
42,466
9,889
10,219
7,961
Housing Assistance Payments
27,097
31,597
30,767
Total Expenses
73,198
78,996
81,194
1,451
(4,795)
(4,131)
77
(266)
264
1,528
(5,061)
(3,867)
4,213
6,757
11,871
5,741
1,696
8,004
209,532
207,836
199,833
$215,273
$209,532
$207,837
Operating Revenue Dwelling Rental Federal, State & Local Grants Net Increase in Cash Total Operating Revenues Expenses Operating Expenses Depreciation Expense
Operating Profit (Loss) Non-Operating Revenues (Expenses), Net Net Income (Loss) Before Capital Grants Capital Grants Increases in Net Assets Net Assets, Beginning of the Year NET ASSESTS, END OF YEAR
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Statements of Cash Flows (in thousands)
Year Ended June 30
2014
2013
2012
$10,081
$4,228
$3,630
346
(1,918)
(3,502)
(2,771)
2,842
160
7,656
5,152
288
70,681
65,529
65,241
$78,337
$70,681
$65,529
2014
2013
2012
Land
$31,384
$31,109
$31,139
Building and Improvement
331,779
313,274
302,263
Furniture and Equipment
14,040
14,100
13,425
Construction in Progress
7,950
19,097
16,823
385,153
377,580
363,650
(258,486)
(247,670)
(237,546)
$126,667
$129,910
$126,104
Cash Flows Provided by Operating Activities Cash Flows used by Capital & Related Financing Acitivies Cash Flows Provided (Used) by Investing Activities Net Increase in Cash Cash and Equivalent, Beginning of Year Cash and Cash Equivalents, End of Year
Capital Assets
Total Capital Assets Less Accumulated Depreciation Capital Assets, Net
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Housing Authority of the City of El Paso 5300 East Paisano Drive El Paso, Texas 79905-2931 www.hacep.org